The U.S. economy added 235,000 jobs in August and the unemployment rate dipped to 5.2 percent, the Labor Department said in its monthly labor assessment Friday.
The median Econoday forecast of analysts was for 740,000 jobs and an unemployment rate of 5.2 percent, according to Econoday. The private payrolls report from payroll processor ADP on Wednesday, however, pointed to a much weaker number, with ADP estimating just 374,000 jobs, missing estimates for 500,000.
The August figures follow the upwardly revised 1.1 million jobs for July (revised from the preliminary report of 943,000), which was the second straight month above consensus, and an unemployment rate of 5.4 percent, which was also better than consensus. The economy added 962,000 in June (revised up from last month’s estimate of 938,000 and the preliminary estimate of 850,000) and 614,000 in May.
One note of caution: the estimate of jobs is based on data from a mid-month work week that occurred when the level of new infections was considerably lower than it is now. That could mean that the survey results, although extremely disappointing, actually overestimated the number of jobs created by not accounting for a slowdown in the second half of the month.
Employment has risen by 17.0 million since the ebb in April 2020 but is down by 5.3 million, or 3.5 percent, from its pre-pandemic level in February 2020.
Employment in leisure and hospitality, which had been averaging 350,000 jobs over the last six months, did not grow at all. Bars and restaurants shed 42,000 jobs. Retail also contracted, losing 29,000 jobs.
Mining, which includes fracking and other energy extraction jobs, added 6,000. IT added 17,000. Financial services grew by 16,000.
The manufacturing sector was remarkably strong given the weakness elsewhere. Employment grew by 37,000 jobs. Manufacturing employment is now 378,000 below the prepandemic level.
In August, there was little or no improvement in other major industries, including construction, wholesale trade, and health care.
Employment increased by 40,000 in private education, declined by 21,000 in state government education, and fell by 6,000 in local government education, confounding expectations for a jump in hiring in the education sector.
The economy outperformed expectations on many metrics in the first two quarters of this year as vaccinations boosted business and consumer confidence and restrictions on businesses were been lifted. But the surge in Covid-19 infections and inflation this summer have coincided with a series of disappointing economic reports that appear to indicate economic growth has already peaked and is now slowing.
The Atlanta Fed’s GDPNOW attempts to assess what the latest data suggests about quarterly GDP. As of Thursday, it read just 3.7 percent for the third quarter, reflecting how much recent economic data has fallen short of expectations. The New York Fed’s version was last updated on August 27 with a reading of 3.8 percent. The “Blue Chip” forecast, compiled from interviews with leading economists, is for growth of around 6.5 percent, down from 7.5 percent a month ago. In August, Goldman Sachs cut its third quarter growth estimate from nine percent to 5.5 percent and bearish Bank of America cut its forecast from seven percent to 4.5 percent.
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